March
1, 2012 - 2011 proved to be another active year for both
investors and hoteliers in Europe, the Middle East and Africa (EMEA)
despite increasing uncertainty surrounding the Euro crisis in the
second half of 2011. At year-end, investment volumes across the region
totalled €8.1 billion, a 5% increase on 2010 levels according to the
Hotel Investment Highlights report by Jones Lang LaSalle Hotels.

2011 saw a growth in portfolio
transaction volumes, which increased by 16% compared to 2010. This
growth was underpinned by the sale of two hotel portfolios, the Mint
and the European InterContinental portfolios, which sold for €698
million and €450 million respectively. Christoph Härle, CEO
Continental Europe Jones Lang LaSalle Hotels commented: “Despite
the marked improved growth in portfolio transactions across the year,
the majority of transactions were single asset deals which accounted
for 60% of the entire hotel investment volume in 2011. Around 78% of
all transactions had a purchase price below €50 million, with only 3%
being above €200 million.”

The most liquid market in EMEA was again
the UK, with a total transaction volume of €2.9 billion at year end
2011. In second place was France with a transaction volume of €1.1
billion, followed by Germany with a transaction volume of about €800
million.

One of the enduring themes in 2011 was
the increasing amount of debt restructuring deals. Many financial
institutions, especially in the UK and Ireland, have started to work
through their balance sheets and have sold assets to improve their
capital positions. They, therefore, took a stronger stance in bringing
hotels into insolvency positions either through receiverships or
administrations. Hubbard said: “Despite the increase in debt
induced sales in 2011, this was primarily confined to the UK and
Ireland. However, other European markets are predicted to follow suit,
due to the mounting pressure from European and governmental
institutions on banks to increase their capital ratios.”

Growth in trading fundamentals in most
EMEA markets was one of the main drivers of hotel investment activity
in 2011. Härle commented, “It must be noted that, although
growth in hotel performance was impressive in 2011 it often came from a
very low base. In many markets, average room yields are still well
below the peaks achieved before the crisis of 2008 and 2009. The pace
of growth in hotel performance also slowed significantly in the fourth
quarter of 2011 and growth is expected to remain relatively weak in
2012.“

Jones Lang LaSalle Hotels
predicts hotel transaction volumes in EMEA to remain stable at roughly
€8.1 billion in 2012. The hotel investment market will see a continued
increase in debt induced sales, as banks press ahead to reduce their
exposure to real estate debt. In particular, loan sales are anticipated
to become more dominant, having become a quick and efficient way for
banks to deleverage. Furthermore, the number of distressed properties
being offered for sale is likely to increase, especially in secondary
markets. Various regional owners will be encouraged to sell their
assets due to continued weak trading performance, leaving margins under
increasing pressure.

Sovereign wealth funds and HNWIs will
continue to buy quality assets in key gateway cities. These equity rich
investors are not exposed to the same extent to the debt/financing
difficulties that other institutions are currently facing, with loan to
value ratios typically between 50% and 60%. These investors also have
the advantage of being able to obtain financing from banks in their
home country.

Härle concluded, “What is
predicted to dampen hotel investment activity is the on-going sovereign
debt crisis. The overall uncertainty has made investors more cautious
and this is expected to continue until European politicians restore
stability and confidence in the European markets.”

About Jones Lang LaSalle Hotels
Jones Lang LaSalle Hotels, the first and leading global hotel
investment services firm, is uniquely positioned to provide the depth
and breadth of advice required by hotel investor and operator clients,
through a robust and integrated local network. In 2010, Jones Lang
LaSalle Hotels provided sale, purchase and financing advice on $4.1
billion worth of transactions globally. In addition, advisory and
valuation services were provided on over 1,000 assignments. The global
team comprises over 225 hotel specialists, operating from 39 offices in
20 countries. The firm's advice is supported by a dedicated global
research team, which produced 70 publications in 2010 in addition to
client research. Jones Lang LaSalle Hotels' services span the
hospitality spectrum; from luxury single assets and large portfolios to
select service and budget hotels, resorts and pubs. Services include
investment sales, mergers and acquisitions, capital raising, valuation
and appraisal, asset management, strategic planning, operator
selection, management contract negotiation, consulting, industry
research and project development services. Jones Lang LaSalle Hotels'
clients have access to the resources of its parent company, Jones Lang
LaSalle (NYSE: JLL). www.joneslanglasallehotels.com